EUROPEAN COMMISSION

Brussels, 25.6.2025

SWD(2025) 335 final

COMMISSION STAFF WORKING DOCUMENT

IMPACT ASSESSMENT REPORT

Accompanying the document

Proposal for a Regulation of the European Parliament and of the Council

on the safety, resilience and sustainability of space activities in the Union

{COM(2025) 335 final} - {SEC(2025) 335 final} - {SWD(2025) 336 final}

Contents

1.Introduction: Political and legal context

2.Problem definition

2.1.What are the problems?

2.2.What are the problem drivers

2.3.How likely is the problem to persist?

3.Why should the EU act?

3.1.Legal basis

3.2.Subsidiarity: need for EU action

3.3.Subsidiarity: Added value of EU action

4.Objectives: What is to be achieved?

5.What are the available policy options?

5.1.What is the baseline from which options are assessed?

5.2.Description of the policy options

5.3.Options discarded at an early stage

6.What are the impacts of the policy options?

Economic impacts

6.2.Social impacts

6.3.Environmental impacts

7.How do the options compare?

7.1.Analysis

7.2.Effectiveness

7.3.Efficiency

7.4.Coherence

8.Comparison summary

9.Preferred option

10.Regulatory burden and simplification

11.How will actual impacts be monitored and evaluated?

Outcomes of a successful implementation of the initiative

Glossary of abbreviations

1.Introduction: Political and legal context

Space systems have become essential for today’s economies and society in the EU. Member States’ public policies increasingly rely on space systems and related services and data, including in security and defence. Space systems also contribute to achieving the EU’s political agenda, enabling the digital and green transitions, and strengthening its resilience.

These systems are vital for the EU single market in important sectors of the economy, such as banking, finance and insurance, energy, telecommunications, aviation and rail. Many critical functions of society, such as civil protection, police, coastguards and the military heavily rely on satellite systems and the data and services they provide. It is estimated that approximately 10% of the EU’s GDP is dependent on satellite navigation signals 1 .

Space systems facilitate a wide range of applications that are an integral part of our daily lives, e.g. satellite television, internet connectivity and navigation. They enable the operation of infrastructure, such as smart power grids and gas pipelines, and strategic sectors, such as finance (e.g. high-frequency trading). Space systems and services are also essential for security and defence operations, with defence spending on space capabilities continuing to increase at national 2  and EU level 3 .

In the last decade, the space sector has undergone a profound transformation, driven by significant technological advancements, the reduction of costs in accessing and using space, and the expansion of private space activities, accompanied by the emergence of New Space actors. Against this background, more than 800 space companies have been created across all EU Member States, contributing to exponential economic growth and job creation. They cover all application domains: satellite communications, Earth observation and satellite navigation (see Figure 2 above). Some of these companies own and run their satellite constellations to generate data or provide services. Moreover, there are 44 companies currently developing launcher solutions in Europe (26 in the EU), which will require orbital launch sites in Europe 10 .

Figure 4: Overview of the European Space economy (source: Euroconsult, Eurospace, EUSPA)

The emergence of New Space is the result of a series of technological and business model innovation trends, lower costs, shorter product development life cycles and a more balanced sharing of industrial risks between the public and private sectors. Both the EU and Member States have put in place measures to harness the potential benefits of New Space companies’ innovation and services. The Commission has set up the CASSINI Space Entrepreneurship Initiative to facilitate access to more than EUR 1.5 billion of private financing. This has helped to ensure growth in the sector in Europe, with more than EUR 1 billion invested in 2022, most of which was through venture capital investment, in more than 100 deals. The Commission also increasingly acts as an anchor customer for EU New Space companies 11 . Additionally, Member States’ governments, particularly defence ministries, are gradually procuring services from these companies 12 .

The rapid expansion of space activities has created growth for the space market and underscored the inherently cross-border nature of space activities. Components, facilities and expertise are often sourced from different countries. Most EU Member States currently rely on other countries to launch their satellites, and there is an increasing number of countries planning to develop additional launch capabilities 13 . In addition, space launches and re-entry have a cross-border dimension in the EU, since they have an impact on the airspace of several Member States.

The growth in space activities and the rapid emergence of New Space has been accompanied by the increasing need for Member States to regulate these activities. Regulation aims to: (i) provide legal certainty for market operators and support the growth of New Space companies; (ii) mitigate the risks of the exponential growth in space activities, including of satellite safety, sustainability and resilience to physical attacks and cyberattacks; and (iii) fulfil their responsibilities stemming from relevant international treaties 14 .

The United Nations (UN) Treaty on Principles Governing the Activities of States in the Exploration and Use of Outer Space (OST) governs the global regulatory framework for outer space. The OST was created during an era dominated by a few space powers and focused on Cold War geopolitics. It emphasises state responsibility, requiring states to authorise, supervise and be liable for their national space activities. However, the OST lacks specific guidelines for fulfilling these obligations, leading to varied authorisation requirements. In the absence of a detailed international legal framework, Member States have pursued different regulatory approaches.

Today, 13 Member States have national space laws, and more are in the process of drafting space legislation to manage the emergence and development of new commercial entrants. The lack of coordination in the regulatory approaches adopted by Member States has led to a fragmented legal framework and created obstacles that impede the emergence of a single market for space products and services in the EU. Member States’ frameworks focus on three sectoral challenges that may affect the development of space activities and new commercial entrants if not properly regulated: (i) safety; (ii) resilience; and (iii) environmental sustainability.

Existing and planned national legislation on licencing requirements differ in scope and detail. Without coordination, the means and approaches to regulating space activities in the EU will continue to diversify. While the growing number of players in the space industry fosters cross-border activities, the increasingly diverse licencing requirements will create barriers for the space industry in the single market, with a negative impact on its competitiveness.

The EU space industry is globally competitive, on par with some of the most experienced players internationally. It is a net positive contributor to the EU’s trade balance, selling complete satellite systems, launch services, and equipment and subsystems. However, the industry is facing three key challenges: (i) an exponential increase in new competitors (e.g. the United Arab Emirates, New Zealand, Australia and Singapore) due to the emergence of the privately funded space industry; (ii) limited market access – only 36% of total space activity is open to global competition, and 64% is dominated by institutional markets and is often closed to global bids 15 ; (iii) the need to comply with the increasingly strict regulations in non-EU jurisdictions when using launch facilities outside the EU.

Against this background, the Commission identified the EU Space Act as a key priority in two recent joint communications: (i) an EU approach for space traffic management; and (ii) the EU space strategy for security and defence 16 . This echoes Member States’ calls for laying down a coherent framework and a single market for space operations. In recent Council conclusions, Member States have recognised the need to avoid fragmentation of the single market for space services and products and to boost the global competitiveness of the EU space industry 17 . They acknowledged the relevance of EU action to ensure equal treatment and a level playing field for the EU space industry 18 . The importance of a legal framework that ensures the long-term sustainability of space has also been recognised by national parliaments 19 . The EU space industry, including small and medium-sized enterprises (SMEs), is also supportive of this approach and calls for a clear legal framework regulating space activities in the EU 20 .

The Draghi report on EU competitiveness underlines, that EU action could increase legal certainty and create a level playing field 21 . The Letta report on the single market calls for greater coherence and coordination of the rules applied to the space sector 22 . EU action would help harmonise licencing requirements on safety, resilience and environmental sustainability across Member States and make them more consistent, and ensuring a higher level of protection. This could improve the conditions for the functioning of the single market for space-based services and data, with a considerable positive impact on the European space industry and its competitiveness. It could stimulate and accelerate industrial innovation through the development of new technologies driven by the requirements set out in the legislative initiative. Ensuring legal certainty could also encourage more investment in the sector, which is essential for the scaling up and commercial growth of New Space companies. 

To prepare this impact assessment, the Commission extensively consulted all stakeholders: Member States, space infrastructure manufacturers, space operators and space service providers, along with research organisations and other stakeholders that were invited to contribute to a targeted consultation and take part in four stakeholder workshops. Their input has been integrated into the study supporting the Commission’s preparatory work. The Commission also published an open public consultation and a call for evidence, to which stakeholders could submit feedback. Annex 3 contains more details on the stakeholder consultation.

2.Problem definition

2.1.What are the problems?

The expansion of the space industry in the EU, driven by a rising demand for satellite services, has led to a growing network of players engaging in cross-border activities. However, in the absence of international solutions, the challenges for the future growth of the space industry have led individual Member States to develop a regulatory environment at national level, without proper coordination.

The diverse range of national approaches to regulating space activities is leading to a fragmentation of the single market and is likely to increase as more Member States have announced their intention to set up their own legal frameworks. This can: (a) impede cross-border value chains for space activities in the EU; (b) create difficulties in protecting space assets, jeopardising the long-term availability and use of space-based infrastructure for users in the EU; and (c) compromise the ability of market players in the EU to address the environmental impact of space activities.

Table 1: Problems and stakeholders involved

The following problem tree illustrates the general factors behind these three problems.

Figure 5: Problem tree

2.1.1.Problem 1: Fragmented single market, hindering cross-border space activities

The rapid expansion of space activities has clearly outpaced the OST 23 , which has governed the domain for more than five decades. As multilateralism has deteriorated over the past decade, the need for unanimity in decision-making at the UN has led to political stalemate when it comes to advancing on further binding measures. The existing international framework is therefore riddled with gaps. This has driven Member States to tackle the serious and rapidly increasing challenges to the safety, resilience, and environmental sustainability of space activities at national level. The result is a patchwork of national regulations varying in scope and stringency.

The lack of common and consistent minimum standards, approaches and baselines due to the different national frameworks hinders the space industry’s ability to conduct cross-border activities in the EU. This, in turn, affects the functioning of the single market of space services and data, as echoed by the EU space industry throughout the consultation process 24 . Most stakeholders (84%) replying to the targeted consultation believe that the increase in space activity calls for specific requirements and guidance for safety in space. There is a need to develop new standards, particularly for the development of mega-constellations 25 . The space industry is particularly vulnerable to regulatory fragmentation due to its limited size (0.5% of EU GDP) and its inherent high-risk and high-cost endeavours.

Space activities involve a long-term commitment (from a commercial perspective) and a complex and sophisticated set of operations (from a technical perspective). The development of space infrastructure and products involves a transnational value chain where the products are designed, manufactured, assembled, tested and integrated into existing systems across a value chain involving numerous actors, who are often in different Member States. The actual requirements to be considered and applied in this process are the result of a combination of regulatory obligations and commercially driven requirements: national licence requirements, conditions set out in procurement and tender specifications (when satellites are commissioned by companies or governments), and sometimes industry-led commitments to follow certain best practices or guidelines. Space activities are therefore subject to a complex mix of regulatory and voluntary factors.

It is important to underline that the regulatory entry point at national level is through the operator who needs to get a licence as: (a) satellite operator; or (b) a launch operator:

·the satellite operator needs both a licence both to operate in space (from the ‘appropriate state’ who is responsible according to the OST) and to launch its satellite (from the launching country); 

·the launch operator needs one licence per launch from the country where the launch takes place.

The OST is open to different interpretations about who is the ‘appropriate state’ to authorise and continuously supervise space activities. As result, several licences may be required for a satellite’s operation, especially if the operation is outsourced to a country other than the one where the satellite operator is based, e.g. via a ground station as a service. For example, a satellite owner based in Luxembourg may need several licences: one from Luxembourg, another from Belgium if the effective control of the operations takes place from there (outsourced operation), and another from France if the launch takes place there. If one of these countries e.g. has stricter de-orbiting rules than the others, there is a risk that the relevant authorities could refuse granting those licences. A similar scenario could arise due to resilience or environmental obligations. Similarly, if the launch takes place in a country other than the one where the launch company is based, the launch company may require additional licences.

As a result, some companies may choose to go to less regulated jurisdictions or simply base themselves outside the EU 26 . Stakeholders interviewed for the study supporting this impact assessment confirmed that this is already happening today. Stakeholders also noted that legal uncertainty in some jurisdictions about licencing procedures and requirements and burdensome procedures in other jurisdictions negatively impacts companies based in the EU, especially SMEs, and will create future obstacles for the EU space industry. This phenomenon affects the competitiveness of European companies, endangering and breaching the fundamentals of the good functioning of the single market. An uncertain regulatory environment for space products in the EU also hampers new initiatives and innovation in the space industry.

Companies interviewed for the study supporting this impact assessment, specifically smaller ones, reported not to have the resources, capabilities or legal expertise to navigate the multiple requirements and frameworks to mitigate the effects of unfair competition on the market. This makes it challenging for them to fully understand and comply with the relevant specifications.

Consequently, the set-up of national legislative initiatives and cost incentives regulating the space industry is creating unfair conditions for EU companies in the single market. This situation is undermining the fundamental freedoms of the single market and leading to an uneven playing field for the EU space industry.

2.1.2.Problem 2: Risk for the resilience and long-term sustainability of space activities

Member States and the EU are increasingly dependent on the use of space-based services and therefore on the robustness of all underlying space infrastructure. The growing number of satellites being launched into orbit not only reflects this reliance but also presents a tempting and vulnerable target for cyberattacks. Moreover, the growth of the space industry is becoming its own weak point as it has led to the accumulation of objects in Earth’s orbit, which creates greater risks of collisions 27 . The threat of physical impacts in space and the rise of cyberthreats poses a risk to the future viability of space activities. The fragmented approach to the regulation of space activities and the lack of common standards and rules undermines the effectiveness of Member States’ efforts to tackle these challenges. This is only exacerbated by the interconnected nature of space infrastructure, where a given system is only as strong as its weakest link.

In a 2023 UN report, the problem of space debris was identified as one of six tipping points that can impact ‘life-sustaining systems that can shake the foundations of our society’ 28 . There has been an increase in the number of collision avoidance alerts in low Earth orbit (LEO), which is the most densely populated orbit with satellites providing essential services to the EU. Simulations have shown that over the next 25 years, if nothing is done, 25 catastrophic collisions can be expected in LEO 29 . The risk of collision is not only a threat to the satellite infrastructure itself but can also seriously affect many users of downstream space-based data and services across the EU.

Moreover, the problem of collision extends beyond in-orbit activities: there is risk when space objects (launchers and spacecraft) re-enter Earth’s atmosphere. Although the re-entry of satellites at their end of life can be seen as a measure to mitigate debris (in line with international guidelines), the amount of debris that does not burn up in the atmosphere (depending on the size, materials and mass of the satellite) risks colliding with an aircraft in flight or landing in a populated area. By 2035, 28 000 hazardous fragments are expected to survive re-entry every year 31 .

Meanwhile, satellites are becoming vulnerable to a variety of cyberattacks and electronic interference, which can disrupt signals. Like any other economic sector, space infrastructure and systems have been profoundly impacted by digitalisation in the past decade. The huge societal shift from the use of analogue technology to the use of software and digital technology has had major consequences for all space infrastructure and systems. Malicious actors may target satellite communication networks and attack ground stations and space-based infrastructure components, aiming to disrupt services, steal sensitive data, compromise satellites missions, and gain unauthorised access. Exposure to cyber risks grows as digital technologies become more sophisticated 32  and software environments become more vulnerable to cyberattacks. The risk of cyberattacks is escalating significantly due to the nature and complexity of space infrastructure with distinct operational segments (space, ground and links) and the impossibility or difficulty in updating hardware in space.

The space ecosystem has experienced an exponential increase in cyberattacks over the past two years. Most industry stakeholders replying to the targeted consultation ranked the likelihood of cybersecurity incidents targeting space systems in the coming years as ‘high’ or ‘very high’ 33 . According to one large industry group, ‘cyber risk is one of the main threats in terms of likelihood and operational impact’.

A recent attack on Viasat/KA-SAT 34  has also shown how cyberattacks can be actively and strategically used in modern warfare. The consequences and damage not only affected Ukraine but also thousands of internet users and internet-connected wind farms in Central Europe. Cyberattacks on space systems can therefore spill over into other countries and cause systemic disruptions, putting at risk essential public services and the population’s security.

Figure 6: Number of satellites attacks per year is plotted on the bottom and left axes, and the number of operational satellites between 1958 and 2018 is plotted on the top and right axes

In summary, without the proper physical and cyber protection of space infrastructure, Member States, the EU population, businesses and the EU itself may lose their ability to access essential space services.

2.1.3.Problem 3: Environmental challenges amid supply chain pressure

The expansion of space activities has triggered growing concerns about their environmental impact, both on Earth and in space. For example, space activities generate ozone-destroying emissions directly in the atmosphere’s middle and upper layers. Propellants used in spacecraft are hazardous, posing a risk of explosion and generating space debris, which can lead to collisions. Finally, there are uncertainties about how rocket exhaust behaves in the atmosphere, particularly during the burning and expansion phases. This makes it challenging to accurately incorporate the effects of small-scale rocket plume into larger climate models. As part of initiatives like the European Green Deal, designed to steer the EU towards a more ecologically responsible future, the space industry needs to cautiously use resources, reduce its reliance on hazardous materials and minimise its environmental footprint.

In addition, as described below, the space sector is strongly impacted by pressure on global supply chains and raw materials.

·Supply chain pressure. The space sector is affected by several dependencies in the supply chain, many of them affecting semiconductors 35 . Another example spacecraft production, including satellites and suborbital and spacecraft launch vehicles, for which approximately 94% of EU foreign imports in 2018 depended on US and UK producers 36 . The impact of the disruption of global supply chains is amplified by: (i) the small size of the space industry compared to other industries (space is only a small customer in terms of volume compared to other large-scale industries); (ii) the complexity of identifying substitutes for the materials and chemicals needed to build space components; and (iii) the dual-use nature of space technologies, especially certain components for semiconductors, which are available to EU end users subject to restrictions and authorisations managed by non-EU countries 37 .

·Raw materials dependency. The growth of the space sector has led to an increased demand for raw materials. The current geopolitical situation has significantly disrupted the space sector’s global value chains. Russia’s war in Ukraine has disrupted the supply of critical raw materials, including nickel, palladium, vanadium and boron. This poses a risk to the space sector, which is highly dependent on these strategic and critical raw materials 38 . Another example is China’s recent export restrictions on gallium and germanium. Many space-related electronic components depend on these materials, which brings challenges and limitations to manufacturing space equipment.

The cumulative impact of recent global crises has exerted unprecedented pressure on global supply chains and value networks, which has impacted the space industry in the EU. These challenges have exposed the space industry’s vulnerabilities and its reliance on critical materials and resources, creating the need for a critical re-evaluation of its business practices

2.2.What are the problem drivers

The problems described above are fuelled by different underlying parameters.

Figure 7: Problem drivers

2.2.1.Problem driver 1: Member States’ diverse approaches to space safety, resilience and environment

International space law was not designed to cope with the rapid expansion of New Space. The OST was conceived at a time when only a few powers were involved in space, primarily driven by the geopolitical dynamics of the Cold War. The OST was structured to focus on aspects revolving around a country’s responsibility, entrusting that country to authorise and continuously supervise its national space activities and holding them liable for such space activities.

The table below gives an overview of Member States that: (i) have an existing space law (X); (ii) are planning to develop a space law (P); (iii) or have made official declarations committing to comply with at least some international guidelines and standards on space safety and sustainability (D).

Table 2: Overview of space laws in EU Member States

Although it sets out a framework with high-level principles, the OST does not describe how those fundamental obligations should be fulfilled, leading to significantly different requirements for the actual conditions for authorising and supervising space activities. This is particularly true where liability and responsibility are invoked, such as the safety, resilience and environmental impact of space activities.

Safety.  Table 3 below illustrates the divergent safety rules that companies face when applying for a licence in different countries (a detailed overview is provided in Annex 6)34. Most national space legislation stipulates – with varying degrees of detail – that licencing procedures should consider whether the operator has made appropriate provisions for space debris mitigation, apart from Luxembourg, the Netherlands and Sweden. The specific requirements imposed on space operators for space debris and safety and environmental considerations differ significantly from one jurisdiction to another. For example, the Greek, Danish and Slovenian legislation merely prescribes that operators make appropriate provisions for the mitigation of space debris. However, other jurisdictions (e.g. Austria, Finland France) specify that operators must take specific measures to avoid space debris residue being released during normal operations, to prevent on-orbit break-ups of the space object, and to remove the space object from Earth’s orbit at the end of the space activity. Some national space legislation prescribes detailed safety, sustainability and space debris requirements for operators (e.g. France). Only Austria, Denmark and France set a deadline for deorbiting space objects at the end of their operating period (25 years). As explained in Section 2.1.1 , these different rules contribute to the fragmentation of the single market and challenge the long-term sustainability of space activities (see Section 2.1.2 ).

Environment.  Table 3 also illustrates the divergent environmental requirements in national space laws. Even when these laws mandate an environmental assessment, the extent of this assessment can differ significantly between them. For example, the scope can cover the impact on Earth and space or just on space (e.g. avoid the risk of contaminating the space environment). While some laws require general information, others require specific and detailed information (e.g. France). This disparity leads to fragmentation in national space licencing, giving companies the flexibility to report and measure using different parameters. This situation not only poses challenges for having consistent environmental rules but also creates a potential loophole for less ambitious companies. These companies can selectively seek out the Member State with the least stringent environmental requirements, which undermines broader sustainability efforts in the EU.

Table 3: Overview of Member States with space laws on safety and environmental requirements 39

Resilience. Fragmentation in the single market is caused by the current disparities in national requirements for having a risk management framework truly suited to the needs of space systems, coupled with no common approach to cybersecurity across the space value chain. If fundamental cybersecurity requirements are not agreed upon by all market players (as no legislative act prescribes them clearly) and are not included from the outset (at the initial stage of design or manufacturing), they cannot be addressed through subsequent risk management practices. This may prevent the respective products from meeting higher or stricter risk management and cybersecurity standards that may be required when applying for licences in other Member States. Similar to safety measures, the lack of a common approach to risk management also undermines the long-term sustainability of space activities (Section 2.1.2 ). This can impact downstream services, and a malicious takeover may lead to a satellite being used as a weapon against other satellites in orbit.

2.2.2.Problem driver 2: Disjointed security/resilience legal baseline between EU-owned space assets and national assets

The EU space programme operates in an increasingly interconnected architecture, including integrated national or commercial assets and (commercial) payloads. However, there is a serious imbalance between the level of cybersecurity protection afforded to EU-owned assets and that of certain national assets. Space programmes have been developed under parallel tracks at: (i) national level for national assets; and (ii) EU level, through the EU space programme flagships. At regulatory level, this parallel development has led to fragmented cybersecurity baselines and an uneven risk management approach for EU-owned 40  and national space assets.

This problem is compounded by the absence of a common cybersecurity and risk management baseline tailored to space systems in national space legislation (where such legislation exists). There is no consistency in the approaches taken at legislative level by Member States. In a few cases, Member States have recently started to draw up, through guidelines, tailored technical requirements for the security of space systems 41 . In other cases, approaches draw on general risk management frameworks or local efforts to achieve convergence 42 or take inspiration from international recommendations. However, without a normative approach (as not all Member States have put in place specific space legislation that also addresses cybersecurity for all space assets), the actual level of protection for space systems ultimately depends on how strict or lenient companies are in integrating cybersecurity into their space mission’s design and operations.

The disjointed cybersecurity baseline is ultimately a threat to the EU space programme and to the delivery of space services underpinning the single market. In addition, satellite operations require an integrated approach. This approach must: (i) cover digital and physical systems and subsystems (space- and ground-based) that work together and are closely interconnected to fulfil mission requirements; (ii) addressing all possible risks (cyber risks, physical risks and jamming risks); and (iii) assess in a coherent manner the protection required for all space sector segments (ground segment infrastructure, space segments and the links between them).

However, it is important to clarify that there have been notable developments at EU level in recent years to address these gaps. First, the revision of the Network and Information Systems (NIS) Directive led to the adoption of the NIS2 Directive 43 in 2022, the new general EU framework for cybersecurity. Second, for non-cyber resilience, a new directive has been adopted, the Critical Entities Resilience (CER) Directive 44 .

The NIS2 and CER Directives will have a significant impact on strengthening the cybersecurity and physical resilience of the ground segment of space infrastructure as they apply to operators of ground-based infrastructure (owned, managed and operated by Member States or by private parties, that support the provision of space-based services). They do not cover the EU-owned space assets that are part of the EU space programme.

The CER Directive sets out national strategies on the resilience of critical entities as well as risk assessments carried out at national level. As explained above, the CER Directive applies in part to space, by including operators of ground-based infrastructure identified by Member States as critical entities (according to the criteria laid down in the Directive). For such identified critical entities specific obligations laid down in CER Directive include the carrying out of risk assessments and measures to boost the resilience of critical entities.

While the CER Directive does not cover the EU-owned space assets (which are part of the Union Space Programme) a cross-reference exists in the Space Regulation to the predecessor of the CER Directive. The Space Regulation requires Member States to ensure the protection of the ground infrastructure (which forms an integral part of the Union Space Programme) by taking measures that are at least equivalent to those required for the protection of European critical infrastructure under the CER Directive and the protection of their own national critical infrastructure. As the deadline for transposing the CER and NIS2 Directives into national law was October 2024 and the ground segment of the space sector is covered by these Directives, Member States’ legislative frameworks on cybersecurity and resilience will be reformed in the near future, including the obligations applicable to the space sector 45 .

The implementation of the NIS2 and CER Directives will lead to significant changes to Member States’ laws and acts referenced in Annex 6. It may entail in many cases certain overhauls of the frameworks applicable to the critical infrastructure, the emergency and disaster management and cybersecurity rules. The Member States risk assessments carried out under the CER Directive would need to take into account other relevant risk assessments and the relevant risks arising from the extent to which the sectors set out in the Annex of the CER Directive depend on one another. In this context, cross-sector dependencies are particularly pertinent for the resilience of the space sector, an enabler of services and application for many critical sectors.

A legislative proposal for safe, resilient and environmentally sustainable space activities in the EU will have to duly consider these developments and address certain key risk management aspects of all relevant space segments in a coherent manner. This proposal will bring about precision and legal clarity on the exact resilience baseline expected from all space actors, including through setting out clear and uniform concepts and definitions. It will enable the national legislations adopted in the transposition of the CER and NIS2 Directives to benefit from a tailored baseline for all the components and segments of the space sector, while leaving sufficient flexibility to the transposition of the general EU resilience and cybersecurity frameworks into national law.

At the same time, to maximise efficiency and avoid regulatory overlaps, the proposal will not entail any altering of the reporting mechanisms foreseen by the CER and NIS Directives. These are well functioning mechanisms anchored in the CER and NIS ecosystem which should be fully observed and preserved.

Table 4: Policy gaps in NIS2 Directive

2.2.3.Problem driver 3: Increasing amount of satellites and space debris

There has been an exponential increase in the number of satellites launched into orbit. According to Euroconsult, an average of 1 700 satellites will be launched globally every year until 2030, with five broadband mega-constellations accounting for more than half (58%) of them 49 .

Figure 8: Cumulative number of satellites in orbit (Source: UNOOSA)

In addition to the increasing number of active satellites in orbit, a growing amount of space debris (see Table 5) is contributing to congestion in space.

Table 5: Number of space debris objects currently in orbit and their related risks

Depending on a satellite’s altitude, a substantial portion of the debris created by satellite collisions can remain in orbit for several decades. Larger pieces with a greater mass, such as undisposed satellites, tend to stay in orbit longer than smaller and lighter fragments. Approximately 25% of large debris is estimated to remain in orbit for longer than 30 years 51 . As space operations increase, a potential doubling of space debris may occur within 25 years 52 . In the longer term, it is expected that there will be 10 times the amount of space debris due to the increasing rate of catastrophic collisions 53 .

A study looked at trends in satellites and debris and the cumulative collision scenarios in LEO (at 600 km). It found that if there are 40 000 active satellites at 600 km in orbit, the accumulation of debris will accelerate so much that ‘after 50 years satellites are destroyed faster than they are launched’ 54 .

Even mitigating measures will not eliminate the problem posed by existing and future space debris: they can only curb the rapid growth in space debris in the future. Based on research by the UN and NASA, the accumulation of space debris will continue to grow, even if no more satellites are launched 55 . Since there is currently no effective operational method to remove large amounts of debris from orbit, debris will continue to accumulate, increasing the risk of collisions with satellites. These circumstances have amplified the long-term risks to the sustainable use of space.

2.2.4.Problem driver 4: Absence of a standard sector-specific method to estimate the environmental footprint of space activities

Implementing a robust life cycle assessment (LCA) framework is crucial for comprehensively evaluating the environmental, social and economic impact of space missions, spacecraft and space infrastructure 56 . However, the lack of space industry specific methodologies for assessing and quantifying the environmental impact of space activities hampers the effective measurement and monitoring of this footprint in the EU. There is no consistent LCA method adapted to the specific characteristics of the space industry and used as a reference point by the space industry, either at EU level or at the European Space Agency (ESA).

(1)The EU sustainability legislation and environmental, social and governance framework do not reflect the unique environmental impact of space activities, such as burning propellant, disposing of space objects, decommissioning spacecraft, and generating space debris 57 .

(2)LCA-related activities initiated by the ESA face significant shortcomings, in particular: (i) data accessibility (most data is for internal use by the ESA, and there are restrictions in giving access to the industry); and (ii) data quality (data not reviewed by independent experts and not aligned with existing standards). Stakeholders acknowledge those shortcomings and support the development of a space-specific LCA method at EU level 58 .

Consequently, the space industry grapples with adequately meeting its environmental responsibilities and aligning with broader EU sustainability objectives. The absence of a standardised sector-specific method to estimate the environmental footprint of space activities, especially amidst mounting environmental challenges and supply chain pressures, presents a significant barrier to achieving sustainability and ecological responsibility in the space sector.

2.3.How likely is the problem to persist?

The cost of access to space is likely to decrease further in the coming years, prompted by increasing global competition and the development of very heavy launchers. The lower costs of launch services combined with the lower costs of satellite development are conducive to the further growth of the space industry in the EU, including New Space actors. This proliferation has democratised access to space, but it also creates a patchwork of regulatory approaches, with a risk of a ‘race to the bottom’.

The EU space industry will continue to become even more cross-border: as more Member States develop launch capabilities, there will be a greater choice of jurisdictions for operators when applying for launch licences. In the same vein, the evolving market trends, marked by the emergence of new types of players and advancements in technology, are fuelling a greater demand for outsourcing satellite operations, a shift which is reflected in the growing industry of ground-segment-as-a-service. Outsourcing can mean that the operational control of a space mission is carried out from and located in a different country than the one where the company that owns the satellite is based. Since most Member States’ national space laws link licencing requirements with the conduct of operations (and effective control), this practice will continue to generate complex licencing requirements across multiple jurisdictions. This will hamper cross-border business and the creation of a single market for space-based services and data.

Member States will be driven to find ways to protect space assets from potential liability related to safety, resilience and environmental aspects due to the following factors:

·space activities will continue to grow: 1 000 satellites are expected to be launched in the next 10 years by EU companies 59 ;

·the increased dependence of many critical sectors on space infrastructure makes it a vulnerable cyber target (including in future warfare);

·the growing overall recognition of the environmental risks associated with space activities 60 .

The updated EU legal frameworks for resilience and cybersecurity mentioned earlier (with the NIS2 and CER Directives having entered into application on17 October 2024) need to be taken into account when ensuring the physical security and cybersecurity of bodies managing ground-based infrastructure in the space sector.

The obligations and related changes at national level under the NIS2 and CER Directives were considered in the future legislative initiative (the EU Space Act), which would bring together tailor-made rules for the space sector, building on the resilience and cybersecurity baselines of the frameworks mentioned above.

Acting without coordination and common approaches will lead to deeper or more fundamental disparities between national solutions, which will increase the fragmentation of the single market.

3.Why should the EU act?

3.1.Legal basis

This initiative is based on Article 114 of the Treaty on the Functioning of the European Union (TFEU). This article enables the EU to adopt ‘measures for the approximation of the provisions laid down by law, regulation or administrative action in Member States which have as their object the establishment and functioning of the single market.’

As explained in Section 2 on the problem definition, Member States are regulating space activities at national level. In doing so, they have introduced national measures that apply to space infrastructure operations, particularly authorisation requirements (involving the various steps to develop and operate space products and services).

Disparate rules across Member States result in uneven levels of protection in relation to: (a) safety; (b) resilience; and (c) environmental sustainability. The patchwork of national rules leads to a fragmentation of the single market, which is likely to grow as more Member States intend to update or develop national space legislation. At the same time, the level of safety, resilience and environmental sustainability has a particularly strong cross-border dimension. This is because space infrastructure manufactured in one Member State, needed to provide space data and services, is very often used by companies across the EU, and space operators often need to acquire several licences in several Member States. Moreover, the rules that exist today in the EU do not address or do not fully address these matters (e.g. disparate rules on safety for space operations; on the resilience of the space segment and only minimal non-sector-specific rules on the ground segment; on measuring the environment footprint of space activities).

Therefore, the EU proposal for a legislative act for safe, resilient and environmentally sustainable space activities should provide the cross-cutting regulatory action that would bring targeted harmonisation to several key aspects of national licencing requirements. The legislation should ensure, as a main objective, the creation and functioning of a single market satellite-based services and data. The initiative would create greater legal certainty for companies and users across the EU by: (i) ensuring a uniform and high level of protection of space services and data (including space infrastructure); and (ii) facilitating the free movement of space-based services and data in the single market and the capacity of companies to work across multiple jurisdictions without hindrances.

Although the Treaty also provides a legal basis related to space policy (Article 189 TFEU), that legal basis cannot be used for this initiative. While Article 189 TFEU is suited as a legal basis for different types of measures that promote joint initiatives, support research and technological development or coordinate efforts for the exploration and exploitation of space, it explicitly excludes any harmonisation of national laws and regulations. As a result, Article 189 TFEU – enshrining a parallel competence of the EU to develop its own space policy – cannot be used to regulate aspects such as requirements for the safe, resilient and sustainable use of satellites that are not in the EU space programme’s scope. According to case law 61 , Article 114 TFEU can be used to regulate aspects related to the functioning of the single market of space sector goods and services. See Annex 7 for a more detailed analysis.

3.2.Subsidiarity: need for EU action

EU action would strengthen the competitiveness of EU companies in the global space economy. Having one set of requirements instead of (+) 13 creates simplification for the EU industry, reducing administrative burden on companies – and public authorities- and increase their ability to innovate and compete globally. Safety, resilience and environmental sustainability requirements would create business opportunities for the industry, and the development of innovative new markets. Finally, it will enable measuring the environmental footprint of space activities.

EU measures would also increase space activities’ overall level of safety, resilience and environmental sustainability. This brings clear added value compared to individual Member State action by: (1) creating a level playing field across the EU by harmonising licencing conditions related to safety, resilience and environmental sustainability; (2) aligning the scope of national space legislation to avoid overlaps, duplication and conflicts, contributing to the functioning of the single market; (3) facilitating the transfer or recognition of licences to provide EU-wide services and goods; (4) improving and harmonising protection for space infrastructure in the EU, thus strengthening the capacity of these systems to deliver data and services that support the single market; and (5) ensuring consistency when evaluating the environmental impact of space activities in the EU.

Regarding point 4, it is worth recalling that the cross-border nature of cybersecurity means that an attack on space infrastructure in one Member State will create spill-over effects in another. Due to this interconnectedness, protection cannot be effectively addressed by individual and uncoordinated actions. Similarly, as regards safety, any unsafe satellite can create risks for other Member States’ satellites in orbit. Furthermore, as described in Section 2 , divergent national approaches risk hampering an open and competitive single market.

3.3.Subsidiarity: Added value of EU action

A common approach for safe, resilient and sustainable space activities at EU level could bring multiple benefits to the EU space sector. Space activities are transnational by nature, and the EU should ensure a consistent and predictable framework for its space industry. The transnational nature of the space market and the global competition in this sector make it difficult and therefore inefficient for Member States to individually address the various challenges in protecting space infrastructure. The space sector is only as safe and resilient as its weakest link, as demonstrated by the amount of debris generated by only a few incidents 62 . The more satellites comply with safety and resilience measures, the less they are likely to collide with other satellites or explode. Similarly, cyberattacks on a satellite in one orbit could have an impact on other satellites in the same orbit (regardless of the country or operator managing it). Finally, EU action that helps the space industry reduce its environmental footprint would drive more innovation in sustainable space technologies, facilitate access to sustainable finance and ultimately increase competitiveness and build market confidence.

Common minimum requirements for the safety, resilience and environmental aspects of space activities for all EU satellite operators and non-EU operators providing a service in the EU would create a critical mass, enabling the EU to influence and further strengthen global standards in these areas. A common approach at EU level could position the EU as a global leader in setting standards in a field that is urgently calling for solutions 63 . The EU space industry would contribute to shaping regulations and creating EU norms, which would lead to mutual recognition agreements between the EU and non-EU countries. In turn, this would increase market access.

As regards the proportionality of the action, it would not go beyond what is needed to achieve the objectives of this initiative and would not impose disproportionate costs that could harm the competitiveness of the EU space industry. The EU action would:

a.create a common baseline for safety, resilience and environmental sustainability for all space infrastructure in the EU;

b.be proportionate to the specific risks of different orbits and altitudes and the specific characteristics of non-critical missions (as described in Section 6);

c.remain technology neutral;

d.respect Member States prerogatives on national security.

4.Objectives: What is to be achieved?

Considering the problems outlined in the previous sections, the general objective of this initiative is to support the development and functioning of an EU single market for the space sector. This will: (i) provide legal certainty to space market operators and foster competitiveness in the industry; and (ii) mitigate the risks of the exponential growth in space activities and ensure the long-term use of space.

Specifically, the initiative aims to:

(1)lay down an EU framework guiding the conduct of European space operators in a way that provides a stable, predictable and competitive business environment that fosters innovation;

(2)ensure space objects can be tracked and reduce the amount of space debris generated by EU space operators and space operators providing their services in the EU;

(3)create a risk assessment framework that is tailored to the cybersecurity needs for space infrastructure in the EU and Member States;

(4)create a common method to assess and measure the environmental impact of space activities in the EU.

In addition, by achieving the above objectives, the initiative will be aligned with the following priorities.

·Space strategy for Europe 64 . The strategy underlines the need for a competitive and innovative European space sector and enabling measures and capacity building at Member State and EU level ‘to create the right ecosystem with a favourable regulatory and business environment that incentivises the private sector to be more risk-prone and encourages businesses to develop innovative products and services’.

·Strategic autonomy for the EU in space. This can be achieved through:

oglobal leadership in space governance: the EU can harness a common approach to safety, resilience and environmental sustainability and build on more global approaches to common global problems (in line with the EU space traffic management joint communication);

otechnological innovation and research: encouraging innovation in the EU space sector, the initiative aligns with the broader objectives of technological leadership;

ostrengthened resilience, protecting the upstream space sector to ensure operations continue and the downstream space sector for the reliable provision of services in line with EU space strategy for security and defence.

·The development of a common LCA method is in line with the EU Green Deal ambition for a sustainable future, particularly with the Commission Recommendation 65  for the use of product environmental footprint (PEF) and organisational environmental footprint (OEF) methods. Reducing space debris and identifying areas to reduce the environmental effects demonstrates the EU’s commitment to protecting the Earth’s orbit and shared natural resources.

5.What are the available policy options?

5.1.What is the baseline from which options are assessed?

The baseline is understood as the situation that is applicable today, with different developments meant to address the safety, resilience and environmental sustainability of space activities at Member State, EU and international levels.

In the absence of a common EU regulatory framework that is tailored to space activities, Member States continue to tackle aspects related to safety, resilience and sustainability in different ways which, as described in Section 2.1.1 , leads to a fragmentation of the single market. More Member States will inevitably regulate space activities, including by providing a regulatory framework for the New Space industry emerging in their jurisdiction. Space operators therefore continue to be faced with different rules and standards in the EU, in addition to those in non-EU countries. This patchwork of rules hampers their competitiveness and potential for innovation. Private investors do not have the legal certainty that is required to continue investing in New Space companies in the EU. This may lead to large industry groups opening subsidiaries abroad to develop and carry out their businesses, and some start-ups and SMEs moving to larger markets (like the US).

On space safety, EU and non-EU space operators can make use of free collision avoidance and re-entry prediction services, such as those provided by the EU SST Partnership 66 . However, the use of these services is not mandatory. At EU level, reflections on the aerospace sector are ongoing 67 , assessing the need for a potential regulation of higher airspace operations (HAO) – this concerns safely operating vehicles in the higher airspace (which may lie in the ‘grey zone’ between aircraft and spacecraft). However, such an initiative would not address space activities.

On resilience and risk management/cybersecurity, as explained in Section 2.2.1 , two recent directives aim to further strengthen the physical resilience of critical entities (CER Directive) and the cybersecurity of essential and important entities (NIS2 Directive). However, while the space sector is partly in the scope of both directives, not all space operators are subject to their rules. Entities operating the ground-based infrastructure are in the scope of both directives, so they will be subject to the risk assessments and Member States strategies in the CER Directive. The CER Directive follows a risk-based approach that includes identifying the critical entities that will be subject to obligations to carry out risk assessments and implement measures to boost their resilience. Therefore, not all space operators will be subject to specific obligations.

Finally, space operators continue to face difficulties in demonstrating their commitment to sustainability and environmental responsibility as there is no universally accepted method to quantify these aspects. While many environmental requirements apply to space activities, space operators continue to face uncertainties and complexities when seeking to obtain licences and ensure regulatory compliance. This leads to delays, uncertainties and potentially more stringent licencing and regulatory requirements as national authorities grapple with the lack of standardised environmental metrics for space operations.

Therefore, in the baseline scenario, the situation described above will continue to apply: no additional action at EU level is planned in the fields of space safety, resilience and environmental sustainability. EU-owned assets and national assets will continue to follow different tracks and requirements, while being in practice increasingly interconnected, especially as regards the requirements for shared payloads and commercial payloads hosted on EU-owned satellites.

5.2.Description of the policy options 68

The starting point for assessing the options are specific technical and operational safety, resilience and sustainable environmental measures. As previously explained, these core technical requirements are different and will remain different as Member States advance due to the related risks (problem drivers 2, 3 and 4) to enact requirements in these areas. All options therefore address all three fields. Each option proposes a different way (for instance, different degrees of regulatory involvement and industrial autonomy) to tackle the objectives of the initiative, which in turn affect the stringency of the requirements (for instance, the technical thresholds set out in the measures). Furthermore, certain options have been ruled out due to their political unfeasibility (see Section 5.3 ). 

Table 6: Overview of measures

5.2.1.Policy option 1: Co-regulation

Option 1 aims to set out certain voluntary measures on safety, resilience and sustainability through a co-regulation approach 74 . The Commission, building upon its experience with the EU space programme (Galileo, Copernicus, SST and IRIS² 75 ), would draw up specific requirements to be met in the field of safety, resilience and sustainability through a legislative act 76 . The Commission would mandate space industry bodies (such as trade associations, standardisation bodies) to develop the technical application of these requirements and steer the process. The bodies would develop and adopt a series of non-binding measures (e.g. in best practices, guidelines and charters).

To ensure that these voluntary measures are effective, the Commission would set specific minimum targets in the legislative act launching the initiative. If these targets are not met, the Commission would be able to end the process. When developing the voluntary measures, the industry would draw on existing international non-binding texts (see example of measures in Table 6 : Overview of measures ) and therefore anticipate potential future needs.

This approach would require a broad participation of stakeholders to ensure widespread compliance with the non-binding measures produced. At the end of the process, the Commission would analyse the results achieved by the space sector. If they are in line with the objectives and targets set out in the legislative act, they would be incorporated into an implementing act.

The implementing act would be non-binding. It would be up to those in the industry and government to comply with them on a voluntary basis. However, the following steps could help increase compliance.

1. Setting up a forum

·In proposing a specific forum for exchanges with Member States on the legislative act, the Commission would help share best practices and the best approaches to incorporate the non-binding measures at national level in their licencing systems. It could be inspired by the current practices of Member States when referring to non-binding international texts in national licencing requirements. Considering the non-binding nature of such acts, Member States would still have the freedom to refer to them or not.

2. Development labels

·The legislative act would support the industry in developing a mechanism to recognise satellite operators that effectively implement the non-binding measures through the creation of ‘space safety/resilience/sustainability labels’ 77 . Today, many space companies make an effort to sign pledges to improve space safety, security and sustainability. The labelling mechanism would create a government-approved tool that verifies, validates and certifies those companies that meet the applicable standards. Such transparency would reduce ‘greenwashing’ and help to incentivise behavioural change. In addition, companies may be more willing to choose a partner carrying a space label that attests that their product is safer or more secure, thereby limiting the risk of future damage.

·The legislative act would outline cross-cutting rules for all the labels, covering governance aspects (e.g. setting up stakeholder groups, setting out the roles and responsibilities of the EU Agency for the Space Programme) and procedures for developing the specific labelling schemes (e.g. space safety, environmental sustainability, resilience). This would include guidance on how to obtain the label and how to use it (including the procedures for monitoring and addressing its potential misuse).

·The different labels would share the same underlying approach. However, as the scope of the topics differs, they would be governed by different steering committees (key stakeholders, including industry and Member States) that would support the Commission in drawing up the requirements.

·The bodies would agree on the most efficient and transparent way to manage the labels’ proper use.

Table 7: Overview of policy option 1

5.2.2.Policy option 2: A binding framework at EU level

The binding framework envisaged under this policy option would entail the adoption of a legislative proposal harmonising certain national licencing conditions that cover safety, resilience and the environmental sustainability of space activities 78 .

These requirements on safety, resilience and environmental sustainability would therefore be integrated into the national licencing systems, whether they already exist or need to be developed 79 .  Table 6 provides an overview of the proposed measures on safety, resilience and sustainability.

The licencing decisions by the relevant national authorities would assess the EU conditions for safety, resilience and environmental sustainability, and the assessment of any other potential applicable national requirements (e.g. aspects related to insurance) would be done in line with national law.

For EU-owned assets, the European Union Space Programme Agency (EUSPA) would receive reports on major incidents from operators of space infrastructure, which would align the rules covering the EU-owned assets with the NIS2 and CER approach to incident reporting.

The legislative proposal would apply to satellites and launchers launched after the date of entry into force of this initiative.

Table 8: Option 2 – Scope of applications

This scope would ensure no conflicting requirements for bodies in the space sector that will fall under the NIS2 and CER Directives. Furthermore, it will avoid operators based outside the EU distorting competition because they may otherwise benefit from less stringent standards in their jurisdictions. It will also prevent potential loopholes in the regulatory system that might lead to circumvention of the obligations imposed under this option.

Member States would have to designate ‘notified bodies’. The EU legislative proposal would set the requirements for entities to become notified bodies 86  who would help Member States with their conformity assessment of the EU requirements.

Table 9: Overview of policy option 2

5.2.3.Policy option 2+: A binding framework at EU level, combined with non-binding measures

This option would build on option 2 and include certain additional non-binding measures.

Award of labels

Through this measure, a mechanism would be developed to better recognise companies implementing non-binding instruments. The ‘space safety/resilience/ sustainabiity labels’ would be granted to companies that correctly implement the instruments on which the labels are based. The same process as in option 1 would be followed.

The voluntary measures laid down under the label aim to encourage the industry to exceed basic compliance and demonstrate a commitment to higher standards and best practices. Such measures would: (i) contribute to further improving the protection of space systems; (ii) signal exemplary behaviour by the industry; (iii) enable regulators at national and EU levels to observe the readiness and ability of the space industry to change and innovate in specific market sectors. The voluntary measures would be particularly relevant in areas where there is a lack of consensus on common solutions, for example, the development of innovative solutions to reduce light pollution.

The exact content of the measures is to be determined (with the help of stakeholder consultations) but what is essential is the intention to go further and meet higher targets.

Table 10: Overview of policy option 2+

5.2.4.Policy option 2++: Bilateral agreements

If options 2 or 2+ are applied, a further step forward could be coming up with a viable solution for the EU to act on the international stage. This policy option would build on the content of options 2 or 2+ in a phased approach.

(1)Adoption of an EU legislative initiative on the safety, resilience and sustainability of space activities, which would create a single market for space products and services with a minimum amount of harmonisation (step 1).

(2)Conclusion of a series of bilateral agreements (step 2). Considering the global nature, scale and impact of space activities, the EU would work to achieve better regulatory convergence at international level by building partnerships with like-minded international partners, especially those with whom the EU already works with as part of Space Dialogues 87  and the EU-led ‘Space safety, security and sustainability of outer space’ (3SOS) public diplomacy initiative.

The focus of these bilateral instruments would be measures that have an impact on the safety, resilience and sustainability of space activities. In addition, the international agreements would provide the legal means to deepen discussions on essential aspects, such as satellite licencing requirements, or possibly trigger the development of mission profiles and, most importantly, shape a common understanding of different concepts and approaches.

Concluding such agreements would inevitably take a long time. However, the outcome, once the agreements are in place, would be reflected in the creation of a body of law of the respective parties 88 , enriching the normative development of the global space sector.

Under option 2++, the Commission would propose a common set of negotiation directives for approval by the Council. The bilateral agreements would aim to have a similar effect as NASA’s Artemis Accords 89 , which have been endorsed by 32 countries, each entering into a separate bilateral agreement with the US. In a similar way, this option would see the EU enter into separate bilateral negotiations with different non-EU countries with the goal of concluding agreements with the same vision and content. The negotiation mandate would stipulate rules that build on the EU’s core measures (set out in option 2 or 2+). The process for concluding bilateral agreements would follow Article 218 TFEU 90 .

Table 11: Overview of policy option 2++

5.3.Options discarded at an early stage

5.3.1.Full harmonisation of national regulations with the creation of a European licencing scheme

The option of creating a European licencing scheme, which would take over the authorisation of satellite launches and operations from Member States, was explored but quickly discarded because the EU is not a party to the OST in line with international law. It therefore cannot take over Member States’ responsibility for authorisation and continuous supervision. A Member State would be liable either as the launch country or as the place where the satellite operator is based but would not be responsible for the authorisation procedure. This option was therefore assessed as legally and politically unfeasible.

5.3.2.International agreements at UN level in the area of space security

The option of negotiating an international agreement on space security at UN level was discarded because: (i) the work of the Open-Ended Working Group (OEWG) on Reducing Space Threats Through Norms, Rules and Principles of Responsible Behaviours in the UN framework has been blocked; and (ii) national powers in the area of security do not make this a politically feasible and realistic option.

5.3.3.Amending existing UN space treaties and setting up a global space governance within the UN framework

The option of strengthening the UN multilateral framework on space by amending existing UN space treaties 91  was also considered but quickly dismissed. The EU itself is not party to the UN space treaties and therefore does not have the right to amend these treaties. In addition, with only observer status at the UN Committee for the Peaceful Uses of Outer Space (UN COPUOS), the EU can only present proposals and amendments orally. As a result, the EU would need to rely on its Member States to have formal proposals for amendments introduced in COPUOS. These difficulties are compounded by the current geopolitical environment and the historically difficult and lengthy process for adopting New Space treaties, which make action under this option unfeasible. Moreover, any proposal for amending the UN space treaties, particularly the OST, carries the risk of upsetting the balance in these treaties, which are widely considered as being a critical, albeit incomplete, foundation for safe, sustainable and secure spacefaring. Similarly, changing the global space governance within the UN framework was considered politically unfeasible.

6.What are the impacts of the policy options?

The analysis in Section 2 has shown key problems and drivers leading to severe consequences for the long-term safety, resilience and sustainability of the space sector. Inaction will inevitably lead to large investments and market adaptations being needed for companies to address all regulatory disparities and the legal-based constraints in a fragmented EU space sector. All policy options should ensure that the EU space industry remains future-proof, by fostering early compliance and risk-mitigation to address the challenges to space safety, resilience, and environmental sustainability

To accurately capture the magnitude and extent of the impact of each policy option, this report takes the following assumptions.

·Policy option 1: Under this option, the Commission facilitates the codification of non-binding measures between industry and Member States. In addition, it encourages industry to develop labels. The analysis assumes that 60% of the European satellite industry and 80% of the European launcher industry 92 would comply with the non-binding measures either through the codified codes of conduct or the labels.

·Policy option 2: This option involves adopting an EU binding framework. The legally binding nature of the measures implies a high compliance rate of the European space industry and of non-EU space operators providing services in the EU to the measures put in place by option 2.

·Policy option 2+: This option envisages the adoption of an EU binding framework referred to in option 2, paired with non-binding and support measures. It is assumed that this will lead to a high compliance rate among those in the European space industry with the binding components of this policy option and a 20% take-up rate of the voluntary measures that builds upon measures that are binding.

·Policy option 2++: Based upon the implementation of options 2 and 2+, this option would involve international bilateral agreements in order to foster a global approach to space safety, resilience and the sustainability impact of space activities. Building on the same compliance rate as under option 2, this option would also reach foreign operators that do not provide services in the EU and are located in a country subject to the bilateral agreement. It could be reasonably assumed that there are certain efficiency losses, coordination costs and dilution of legal content associated with the international scale of the action.

Based on the above-mentioned assumptions, the following section lists the expected impacts 93  stemming from the policy options and identifies how they affect the baseline scenario (Section 5.1 ).

The table below provides an overview of the economic, social and environmental impacts and a high-level estimation – for each policy option – of the magnitude of the impact compared with the baseline scenario. A Likert scale from 0 to 3 visualises an estimation of whether there is an impact, either positive or negative, ‘to a limited extent’, ‘to a certain extent’ or ‘to a large extent’. The caption to interpret results is presented below:

Regarding the effectiveness, efficiency and coherence analysis of the selected policy options, the various policy options were assessed with a score from 1 to 3 depending on their suitability to target the general and specific objectives.

6.1 Economic impacts

6.3.1.Baseline

A fragmented single market would create economic challenges for the industry due to several factors.

A.Without legal certainty and clarity investors may be deterred from investing. A lack of available funding would more significantly impact emerging New Space companies who would face difficulties in scaling up and as a result may even choose to leave the EU. On the other hand, established industrial players would see no or little incentive to invest in innovation and become more competitive.

B.The baseline is not conducive to improving the position of small players in the space sector. SMEs would need to navigate through several different and complex national requirements (to achieve regulatory compliance under each applicable regime). Small players may not necessarily find in each national regime a tailored baseline for their specific needs or the proportionality they seek so their needs may be understood and reflected upon differently in each national regime.

104 SMEs replied to the targeted consultation. According to 87% of them, the current national space laws are not fit to ensure the safe and long-term use of space. 85% of SMEs claimed that the increased space activity calls for specific requirements for the safety of space activities, and 69% claimed that the risk to space infrastructure also calls for specific requirements. 90% of SMEs agree or strongly agree that with increased space activity there is a need for a common method across the space sector to measure its environmental impact on Earth and on space.

C.The most important impacts are those related to actual costs. The baseline prompts a clear risk of leaving space infrastructures unprotected from safety and cyber risks.

Costs due to safety risks 

As shown in Section 2 , the risk of collision would continue to grow. The Organisation for Economic Cooperation and Development (OECD) has estimated the risk of collision to be costly, averaging 5-10% of the mission cost which often reaches to hundreds of millions of euro 94 . Industry would also face costs for carrying out satellite manoeuvres due to service interruption. Without improved compliance with safety measures, the European Space Agency (ESA) has projected that by 2040, the number of close collisions at 500 km altitude will increase nearly sixfold 95 . The risk to the orbits is at a tipping point, where mitigating space debris is imperative to ensure the future usability of space. Once the Kessler effect is triggered, the space industry will lose access to space, and users lose access to important space-based services.

Costs due to cyber risks

Without proper cyber protection in place, the space industry is vulnerable to attack (see Section 2). The costs of cyberattacks on space assets – as explained in the estimations carried out through several use cases 96  – lead to: i) serious financial impacts (direct operational loss of the service, equipment destruction) depending on the magnitude of the cyberattack and the level of vulnerability; ii) a loss of market potential in front of competitors; iii) lengthy periods of time needed to resume activities; iv) potentially significant reputational damage; v) loss of market confidence (investors withdrawing); and, in some (limited) cases; vi) bankruptcy (overdue payments and incurring fines).This is compounded by the lack of legal certainty in the space sector, which exacerbates the financial and operational risks associated with cyber threats.

The gaps identified in the NIS2 framework, create regulatory uncertainty and ambiguity, making it difficult for businesses to assess their exact obligations, ensure compliance and secure investments. To date, most Member States have not yet fully transposed the NIS 2 directive 97 , thus leading to a transitional period of regulatory uncertainty. Uncertainty discourages private sector engagement, slows innovation and limits funding opportunities, as investors perceive heightened risks. Lack of clarity on the applicable rules to space entails uncertainty as regards the level of legal protection which can lead to fragmented cybersecurity approaches of space operators increasing the overall vulnerability of space infrastructure. Without a comprehensive regulatory approach and without explicit rules on how cybersecurity baseline applies to the space sector, market instability may rise, hindering long-term growth in the space industry.

In the three cases considered in this analysis, the costs of cyberattacks were estimated at EUR 10 million, EUR 290 million and EUR 525 million, respectively. On average, in a realistic scenario, the average cost of a cyberattack could be estimated at around EUR 26 million, therefore making the total systemic cost of all cyberattacks per year (taken for 2023) around EUR 1.17 billion. This estimation would suggest space cyberattacks could cost the space industry approximately at least EUR 900 million per year. In a pessimistic scenario, the annual cost would increase almost threefold by 2032 98 .

The cost of the baseline or status quo would have severe repercussions on the safe, resilient and sustainable use of space, and the EU space industry.

D.Lack or loss of competitiveness:

Globally: the fragmentation stemming from differing national licencing conditions, leading to barriers emerging in the single market is likely to adversely impact the EU space industry’ capacity – including that of the New Space industry – to grow and reach the level of maturity needed to compete and innovate on a global scale.

Locally: while the planned new spaceports in Europe are expected to create economic opportunities (new possibility to launch satellites), the complexities and disparities of differing safety, resilience and sustainability licencing requirements would hinder business opportunities across EU borders, as these would have to be implemented at design phase.

E.The quantification of the missed opportunity (net present value 99 ) from the global satellite industry in 2040 – i.e. the cost of inaction – varies from around EUR 270 billion if optimal management begins in 2025 to around EUR 630 billion if optimal management begins in 2035 100 . This represents almost the entire value of the global space sector. It is also estimated that the loss of access to space could represent a global loss of 2.56% of the global GDP.

6.3.2.Policy option 1

The development of the non-binding option (co-regulation and voluntary labels for safety, sustainability and resilience) for the EU space industry - as envisaged by option 1 - would be an industry-driven initiative, intending to increase compliance with the most relevant existing standards, best practices, and guidelines to proactively develop at EU level.

Main impacts:

The partial reach of this option would yield only a limited impact on the competitiveness of the EU space industry, and no impact on the development of the single market, as Member States would retain own requirements for safety, resilience and sustainability.

It can be assumed that a co-regulation approach, which is industry-led and industry-oriented, may lead to a certain degree of compliance. Therefore, in terms of protecting space assets, it can be assumed that, for most EU satellites, space operators may comply with certain protective measures (such as space debris mitigation, satellite tracking and certain good practices of encryption of critical parts of the satellite). Moreover, some operators may be incentivised to comply with the extra non-binding measures, leading to the award of the label to gain a competitive advantage (increased investment; government use of the label in procurements).

However, the level of protection achieved through this option would not be all-encompassing. Considering the extent of the interconnectedness of all space systems, only one part in the overall satellite population complying with protective measures may imply that this option would still leave space infrastructure vulnerable to collisions. In addition, the level of ambition sought may be also influenced by unpredictable factors such as: i) the bargaining power of large space operators compared with the position of small players; ii) the inability of small players to comply with certain non-binding standards due to lower budgets; and iii) inevitable diverging economic self-interests.

The co-regulation is not expected to feed into a lot of research and innovation activities. Due to the industry-driven approach, it can be assumed that the results will be largely based on existing industry practices. However, some limited business and research opportunities may be created.

6.3.3.Policy options 2 and 2+

A regulatory option through targeted harmonisation would generate several benefits.

In the short term, this option would contribute to a well-functioning single market in a straightforward, rapid manner, by removing and avoiding barriers and hindrances in EU cross-border trade. It would boost the competitiveness of the space industry, (including for start-ups and SMEs) by reducing the level of administrative burden and costs for companies that would: (i) no longer have to comply with multiple uncoordinated requirements 101 ; (ii) place the same product in all EU-27 Member States; and (iii) have faster time to market (shorter time to prepare licencing file, including for constellations).

In the mid-term, this option would increase the lifetime of satellites due to energy savings on board satellites (induced by the decrease of manoeuvres) and therefore enable companies to extend their mission and generate more revenue (for example: a one-year extension of a LEO satellite that has a 5-year lifetime would enable companies to generate 20% more revenue without additional expenditures). These options would help to further grow the EU space industry through: (i) consumer-confidence: the level of protection for space infrastructure would increase the use of more space-based services that would be more reliable; (ii) access to private funding: a stable and predictable regulatory environment would attract further private investment, which is key for New Space actors to scale up and grow (based on the commercial growth of current start-ups, the total investment need for the next seven years is estimated at EUR 10 billion), especially those in need of larger fundraising 102 .

This option would also enable new commercial markets to be developed (e.g. in-space operations and services), accelerate innovation (e.g. innovation related to reducing the environmental footprint) and enable new space-based services (e.g. satellite tracking services).

The options 2 and 2+ would lead to the following estimated benefits.

·Regulatory simplification induced by streamlined licencing process for constellation (for satellite operators): EUR 68 million over the next 10 years;

·Savings related to the reduction of the number of manoeuvres by two (for satellite operators): EUR 674 million on average per year;

·Savings induced by a higher level of protection against cyber incidents (for manufacturers): EUR 320 million on average per year.

In the long-term, this option would help preserve the space-related business by reducing the risk of collision (with debris and active satellites, saturation and cyberattacks). Considering that the global space economy is estimated to reach EUR 700 billion by 2031 and that the EU-27 currently represents 20% of it, this option helps secure business activity worth EUR 140 billion for the EU space industry in the long term.

On the other hand, the binding nature of the measures envisaged would create additional obligations and therefore lead to additional costs for the space industry. Although the level of compliance costs would depend on the extent of measures currently implemented by companies along the value chain, options 2 and 2+ would lead to a generalised increase in costs for companies on the market compared to the baseline 103 .

Additionally, the space industry is now operating within an evolving EU legislative framework on resilience and cybersecurity, with the CER and NIS2 Directives entering into application, both of which are still being fully transposed by Member States. This ongoing process can generate legal uncertainty and cost duplication for space actors, as they may have to comply with resilience and incident-reporting obligations under different frameworks. At the same time, important synergies could arise by leveraging common governance mechanisms already envisaged for CER and NIS2. For instance, the same notified bodies or national authorities responsible for reporting under CER or NIS2 could also verify compliance for space-specific requirements, thereby preventing multiple, overlapping audits and certifications. Similar benefits may emerge on the physical and operational resilience side—by aligning with CER’s processes, space operators can avoid duplicating impact assessments or reporting lines. This could streamline compliance across the different legal acts and avoid unnecessary administrative overhead, while at the same time ensuring coherence among the different frameworks.

According to the industry, the impact of the requirements from option 2 and 2+ would lead to a cost increase for the EU space industry of:

·between 3 and 10% of the total manufacturing costs, representing an average annual cost of EUR 180 million over the next 10 years;

·approximatively EUR 28 million per year on average for launchers;

·approximatively 1% of the manufacturer’s turnover for the resilience-related measures, representing an annual average of EUR 80 million.

However, the costs associated with this policy option would be far less substantial than the costs of the baseline. Indeed, the cost of a cyberattack is estimated to be approximately five times higher than the estimated cost of cybersecurity measures needed to prevent or withstand the attack. Therefore, a strong regulatory framework could not only reduce the number of successful cyberattacks in the future but also reduce the average cost associated with each cyberattack. Similarly, without reducing the collision risk to satellites, operators will lose satellite lifetime and service revenue from having to carry out manoeuvres, and in the worst-case scenario lose the satellite altogether in a collision. 

The absence of a common LCA methodology for companies can result in environmental degradation, regulatory non-compliance, reputational damage and missed business opportunities, including no access to sustainable finance.

The regulatory framework would be key to ensuring long-term sustainability of space infrastructure, and therefore the ability for the EU space industry to continue its activities. In addition, the costs would be partially offset by (i) proportionality and (ii) support measures. The level of sophistication of the measures implemented by the space industry would vary depending on certain criteria, such as the level of criticality of space missions (see in Section 3.3 ).

Proportionality

The proposed EU initiative could acknowledge the possibility of applying a light regime in the licencing process, while Member States could remain in charge of assessing and deciding, on a case-by-case basis, whether to approve such a light regime or not, in light of certain criteria set out in the EU initiative (e.g. i) taking into account the objectives and low technical complexity of the mission; ii) lack of strategic importance of the respective space programme; and iii) track record and severity of security incidents incurred by the actors). To avoid different approaches being used to approve such light regimes across the Member States, coordination mechanisms could be put in place along with a notification to the Commission. Additionally, to ensure consistency in national approaches and prevent regulatory arbitrage, EUSPA could regularly monitor the application of such regimes across Member States and submit appropriate recommendations to facilitate supervisory convergence.

Table 12: Overview of light regime

Support measures

To offset part of the costs induced by complying with the binding requirements outlined in option 2, especially the costs for SMEs for which some of the measures may be more burdensome than for large players 104 , the following (non-exhaustive) list of support measures could be envisaged.

·Capacity building: to support companies (satellite operators, launch service providers, manufacturers), the Commission would propose to produce additional documents (guidelines and templates) on how to best comply with the rules and use the space labels in national procurement procedures. The Commission would also develop supplementary guidance documents related to the binding rules that would apply to novel areas, such as in-space operations and servicesor orbital traffic rules. This support measure would also benefit Member States (relevant national authorities and notified bodies).

·Technical assistance: to offset the number of full-time equivalents (FTEs) required by SMEs to prepare licencing files, the Commission would create a pool of independent experts that would assist the SMEs with this task free of charge.

·Mentoring and coaching: To offset part of the costs related to cyber resilience for those manufacturers moving from the light to the normal regime, and for SMEs implementing LCA practices based on PEFCR, the Commission would develop a mentoring and coaching programme, under which vouchers would be provided.

·Access to testing: to offset part of the costs related to the testing (including threat-led penetration test) of the platforms, a mandatory requirement, the Commission would (i) map existing testing facilities and services in the EU, and (ii) develop a framework contract that would ensure fast and affordable access for companies (in particular SMEs) to threat-led penetration testing

·Development of new technological solutions: to offset part of the costs related to innovating and developing new technological solutions that would enable the industry to comply with the mandatory requirements (for example, developing new encryption technologies and on-board safety systems), the Commission could co-fund joint research and development projects as part of the Horizon Europe Programme.

·Exchange of best practices: to enable the sharing of best practices and lessons learned as regards cybersecurity, the Commission would promote and facilitate collaboration and knowledge sharing among stakeholders, through the information-sharing hubs/platforms. The legislative initiative would acknowledge that all such sharing of information would take place in compliance with EU rules on competition and data protection. The Commission would promote the use of the EU Space Information Sharing Analysis Centre (EU Space ISAC).

·Standardisation: to offset part of the manufacturing costs, the Commission would fund the development of standards that would streamline the production processes and components involved in the manufacturing process. The development of standards would closely involve EU industry, including SMEs. Such standardisation activities would also reduce supply chain risks and encourage innovation. For example, launcher neutralisers (safety components to reduce space debris) are currently bought off the shelf from abroad. The development of European standards would stimulate the development of neutralisers in line with the mandatory requirements.

·One-stop-shop approach: to further increase the benefits of administrative simplification and streamline compliance procedures, particularly for SMEs, the Commission would propose a one-stop-shop approach. To enable this, the following steps would need to be carried out: (i) the Commission would propose that each Member State sets up a helpdesk for any questions related to the licencing system; (ii) at EU level, the Commission, with the support of EUSPA, would set up a helpdesk to answer SMEs’ questions, for example, if they have difficulty identifying the Member States in charge of the licence (such as an SME based in Spain launching from Portugal and having German shareholders); (iii) the Commission would create an online regulatory portal/self-assessment tool to help companies navigate and identify applicable legal requirements; and (iv) the Commission would provide clear compliance checklists to enable companies to comply with relevant requirements.

6.3.4.Policy option 2++

The impact of option 2++ could result in a complex landscape. As the content of these agreements cannot be fully envisaged due to the intricacies of diplomatic discussions, a conservative estimation of the potential impact is imperative.

Option 2++ would have approximately the same economic impacts as option 2 but at a greater scale compared to the baseline, as it would also ultimately affect both EU and non-EU space operators, as well as service providers not providing services in the EU. However, for non-EU space operators who do not provide services in the EU, the requirements are likely to be less strict than those under the binding EU act (option 2). The option 2++ would also have delayed benefits due to the time needed for negotiating the various bilateral agreements, therefore delaying the reduction of space debris in orbit.

Summary of the cost-benefit analysis

The main assumption taken to carry the cost-benefit analysis was that the legislative act would reduce the amount of space debris by 50% by 2034 due to increased sustainability of space activities. This reduction of space debris will be enabled by an overall increase of protection for space assets due to higher standards for satellite shielding and requirements for satellite passivation and end-of-life de-orbitation. Registering EU and non-EU satellites with EU-SST would also allow for better prediction on when in-space close encounters could occur. This would lead to better coordination between satellite operators, therefore reducing the need to do on-orbit manoeuvres and limiting the risk of collision with space debris. In addition, regarding the space sector’s resilience, the main assumption is a reduction in cyberattacks on space infrastructure operators leading to a reduced disruption of space-based services.

The data used for the analysis comes from the ESA, national space agencies, the targeted and public consultations supporting this report (collecting 333 and 44 replies, respectively) and the dedicated industry workshops (which gathered over 170 participants).

Table 13: Summary of expected costs

The overall safety, sustainability and resilience requirements would create an increase in costs for satellite operators of EUR 322.8 million. However, this increase in cost could be partially negated depending on the specific practices of satellite operators.

Table 14: Summary of expected benefits

Assuming that a legislative act for safe, resilient and environmentally sustainable space activities would allow for a 50% reduction of space debris over the next 10 years, the initiative would benefit satellite operators, enabling an annual benefit of EUR 677.5 million, completely offsetting the costs driven by the higher requirements stemming from the law. Those benefits do not take into account the market opportunities that will be created thanks to new markets emerging, such as in-orbit servicing, as they are not mature enough to be objectively quantified at this stage.

A detailed cost-benefit analysis is provided in the following sections.

6.3.5.Focus on the costs for the public and private sectors

From the public sector perspective, the costs of implementing the various options would depend on the maturity of the space sector in each Member State. The public costs in Member States that have an extensive space economy and a space law in place would be lower (1-2 FTEs) compared to other Member States that do not have an existing regulatory framework (4 FTEs). Some Member States would require between 1 and 4 FTEs to handle the regulatory needs of the licencing requirements and may decide to entrust certain tasks to the EUSPA, which would need up to 15 FTEs. In total, options 2 and 2+ would require 59 FTEs, while option 2++ would require 62 FTEs.

From the private sector perspective, the costs for options 2, 2+ and 2++ would be similar. From an administrative burden point of view, those options will reduce the administrative burden by creating a common set of rules instead of 27 different rules that the operators must comply with if they want to provide satellite based services across the EU. For option 1, the cost of the licencing requirements is not considered. However, the satellite operators would still need to receive a licence from the launching state and from the authorities from their place of operation.

Not taking action would entail significant costs. European stakeholders operate several hundreds of satellites, contributing to a market valued at over EUR 80 billion per year. Moreover, the EU and its Member States increasingly rely on space-based services. Losing access to space due to uncontrolled proliferation of space debris and increased risk of cyberattacks would have far-reaching negative consequences for the space industry itself and for all economic and societal activities that depend on space services.

In addition, the cost of a cyberattack is estimated to be approximately five times higher than the estimated cost of the cybersecurity measures needed to prevent or withstand an attack. A strong regulatory framework could therefore not only reduce the number of successful cyberattacks in the future but also reduce the average cost associated with each cyberattack.

Table 15: Public and private costs

The aggregated costs from this increase in satellite manufacturing costs over the next decade are presented in the table below 106 :

Table 16: Aggregated costs of satellite manufacturing cost increase in the EU (Source: Roland Berger) 107

The total average cumulated costs increase over 10 years will imply an average increase of the costs of a European satellite of EUR 2 million, to be compared to an average cost of a satellite of EUR 93 million.

Table 16 presents the aggregated costs from this increase in manufacturing costs for launcher manufacturing over the next decade 108 :

Table 17: Aggregated costs of launcher manufacturing cost increase in the EU (Source: Roland Berger) 110

The total average cumulated costs increase over 10 years will imply an average increase of the cost of European launchers of EUR 800 000 representing an average increase of 1% of the launcher costs.

6.3.6.Focus on the quantification of the operational benefits

From an operational perspective, as collision risks for potentially trackable or untrackable debris are difficult to predict, satellite operators tend to carry out avoidance manoeuvres based on alerts of close approaches of space debris. Modelling work at global level has suggested that close approaches will rise from 20 000 in 2019 to more than 50 000 by 2059. This means that satellite operators will have to carry out up to three times as many avoidance manoeuvres in 2059 than in 2019.

Combined data from CNES, DLR and ESA suggest 1.5 collision avoidance manoeuvres per satellite per year in LEO. Considering that European operators operate 779 satellites in LEO in 2023, this would imply around 1 000 collision avoidance manoeuvres per year in LEO carried out by European satellite operators or EU Member States space agencies.

Collision risk avoidance manoeuvres are also a problem in the GEO region, not necessarily related to the need to avoid collision with debris, but due to the number of satellites in this very confined area of outer space. Stakeholder interviews reveal that an average GEO satellite operator with a fleet of 20 satellites carries out up to 50 collision avoidance manoeuvres per year.

Collision avoidance manoeuvres come at a price. They take significant time to plan, and in particular, they require fuel, which ultimately shortens the lifetime of the mission. Furthermore, due to the inaccuracy of data related to the position of the objects in question, it may not be essential to carry out lots of manoeuvres, but they have to be carried out as a precaution, which generates extra costs. Furthermore, each collision avoidance manoeuvre causes satellite services to be interrupted briefly.

The table below shows the estimated annualised costs of collision avoidance manoeuvres resulting in the shortening of satellites’ lifetime. The table also indicates the costs linked to the interruption in collecting and distributing Earth observation data resulting from collision avoidance manoeuvres of Earth observation satellites in LEO 111 .

Table 18: Estimated yearly costs of collision avoidance manoeuvres (Source: Roland Berger) 112

Policy options 2, 2+ and 2++ will have a significant impact on the reduction of space debris and therefore on the number of collision avoidance manoeuvres. Assuming collision avoidance manoeuvres are reduced by 50%, the following benefits to the European operators can be expected:

Table 19: Benefits for European operators thanks to the reduced number of collision avoidance manoeuvres (Source: Roland Berger)

As described in Table 19 above, the annual operational benefit for space operators thanks to the reduced number of collision avoidance manoeuvres can be estimated at EUR 675 million. Comparing this benefit with the increase in manufacturing costs for satellite operators described in Table 16 (EUR 180 million) leads to a net operational benefit for the European operators of EUR 495 million annually.

The benefits of cyber protection that would be required under policy options 2, 2+ and 2++ would also add to the overall benefits. It is considered that the cost of cyberattacks amounts to five times the costs of cyber protection, which results in an annual benefit of EUR 320 million 114 for manufacturers.

Furthermore, the policy options 2, 2+ and 2++ would enable regulatory simplification in proposing one single licence per satellite constellation rather than one licence per satellite, which today does not exist in Europe. Assuming that up to 20 constellations representing approximatively 700 satellites over the next decade, this would represent a benefit of EUR 68 million.

6.3.7.Focus on international competitiveness

Europe is a worldwide leader in the space sector with an estimated 20% share of the total global space economy, worth EUR 84 billion out of a total of EUR 420 billion globally. Projections indicate that by 2035, the space economy could reach EUR1.7 trillion, driven by advancements in communications, positioning, navigation, timing, and Earth observation services.

While the EU has historically held a significant share of its value, the competitive position of EU space industry in the global market is being challenged. With only 5% growth over the past five years, Europe is losing ground to more dynamic global players. 115  The competitive landscape is evolving rapidly, with established space powers such as the United States, China, and India intensifying pressure on the European space sector. Additionally, the rise of emerging space-faring nations and increased global private investment in space technologies signal a shift in market dynamics that could challenge Europe’s market position.

Structural challenges facing the EU space sector

In the upstream market segment 116 , both commercial and export markets have seen a decline. According to industry estimates, the number of customers has fallen by 30% both among European private sector customers and public institution customers in the rest of the world. 117 Satellite application systems and launchers have been particularly affected. The European space industry, once thriving in the geostationary segment, has struggled to adapt to market evolution (e.g. the rise of Low Earth Orbit constellations) and keep up with international competitors 118 . European companies have visibly fallen behind the US and China in developing reusable launchers, and EU projects have been marred by delays and cost overruns. Meanwhile, highly innovative new launcher start-ups and SMEs are emerging across Europe, but they often struggle to find the capital they need to finance their development in the EU and seek financing opportunities in third countries, especially for commercialisation and industrialisation, resulting in Europe not being able to fully leverage this innovation potential.

The European space sector differs from space sectors elsewhere on several aspects such as: (i) a smaller institutional budget; (ii) a strong reliance on commercial and export sales, making it more exposed to market fluctuations; (iii) limited military expenses in the sector; (iv) relatively less developed synergies between the civil and defence sectors; (v) limited access to finance and lower R&D funding compared to other established space nations; (vi) a lack of standardisation; and (vii) a fragmented regulatory framework across EU Member States.

The fragmentation of national space laws across EU Member States, together with the lack of common standards in upstream and downstream segments, creates barriers for cross-border space activities, leading to inefficiencies and uneven business conditions 119 . This regulatory divergence hampers the EU space industry's global competitiveness. The lack of regulatory certainty discourages private investment, essential for scaling up New Space companies and developing emerging markets. Moreover, the fragmented space data market in Europe, partly caused by divergent regulatory landscape, also affects the capacity of space companies to scale up and expand across the Europe.

While investment in space start-ups (upstream and midstream) saw a big increase in value until 2021, reaching more than EUR 14 billion globally, this spike in investment has been diminishing. Since 2021, the current market cap of New Space companies accounts for EUR 4 billion, showing the nature of New Space activities reflects that of a deep tech sector 120 . This reduction in the market cap of New Space companies is also explained by the lack of standardisation in the sector, as well as the lack of regulatory stability.

Figure 9: Private investment in New Space companies globally (Source: Eurospace)

Although Europe remains the second region attracting the most investment into New Space ventures, the US is leading by far with significant growth over the past three years.

Additionally, EU space companies face an increasingly limited access to international markets. Globally, 64% of space activities are captive to domestic actors, primarily due to domestic-preference policies, export control requirements 121 , insufficient cooperation with third countries and lack of reciprocity in global public procurements.

Figure 10: Investment volume per region (Source: ESPI)

EU Competitiveness in Emerging Space Markets

New Space represents a growing sector characterized by private investment, commercialization, and innovation in space activities. Despite Europe being the second-largest region attracting investment into New Space ventures, the US continues to lead with significant expansion over the past three years. Without a harmonised and stable regulatory framework at the EU level, European start-ups and SMEs struggle to secure funding, scale operations, and maintain a competitive edge. The lack of legal clarity also impedes market development in emerging segments such as in-space operations and services, an industry projected to grow from EUR 2 billion in 2023 to EUR 4.5 billion by 2030.

While it is important to lay down standardised rules at EU level, it is crucial to avoid a situation where the adoption of more stringent requirements, compared to those of non-EU countries, would hinder the competitiveness of the EU industry. Imposing overly strict rules may discourage space companies from choosing the EU for their operations.

The introduction of voluntary labels and non-binding guidelines by the EU space industry, as envisaged by policy options 1 and 2+, represents a market-driven approach. This aims to encourage companies to comply with the most relevant existing standards, best practices and guidelines, proactively developing non-binding instruments at EU level. Past initiatives from the industry in other sectors have demonstrated that voluntary measures, such as labelling, can be powerful tools. When used effectively and responsibly, they create a pro-competitive market environment for the industry.

Implementing binding measures outlined in policy options 2, 2+ and 2++ would incur some additional costs for manufacturers, estimated to range from 3% to 10%, according to industry representatives and ESA. However, these increased costs would be offset by higher revenues resulting from better reliability and durability of space assets. This improvement stems from increased safety and resilience measures. Policy options 2, 2+, and 2++ could potentially boost the competitiveness of the EU space industry at international level for both established and New Space players. Compliance with higher standards could help EU companies compete in a global market with increasing demand for safe, secure and sustainable standards. At the same time, EU requirements would be based on state-of-the-art measures, building on existing standards. The improved reputation of the EU industry and its leadership in sustainable space practices globally would benefit the entire industry, including SMEs and start-ups. The fact that those measures would also apply for non-European companies that want to address the single market will also level the playing field between European and non-European companies.

International competitiveness and market position

The US space sector operates under stringent licensing requirements enforced by the Federal Communications Commission (FCC) and the Federal Aviation Administration (FAA). These requirements, which often exceed those currently implemented by EU Member States, establish a high benchmark for international market access. As a result, EU companies seeking entry into the US market currently face additional regulatory barriers. By aligning with international best practices, policy options 2, 2+, and 2++ would provide European companies with a competitive advantage by facilitating mutual recognition between the EU and the US requirements. This alignment would enhance Europe’s ability to compete in the global marketplace.

As shown above, the proposed legislative initiative will not put the European industry at a disadvantage compared to its main competitors in the US, especially as space is a relatively closed market outside of Europe and the US, with the other major space competitors (Russia, China) being closed to western companies.

Table 20: Comparisons of safety and sustainability requirements in selected EU Member States and the US

Furthermore, since non-EU competitors would be subject to equivalent requirements when providing services within the EU, the impact on EU manufacturers’ relative prices and market shares is expected to be limited. This will create a level playing field for space companies and would benefit SMEs and start-ups, since increased EU-wide market access and easier cross-border trade would boost their market share. 

Reducing market entry barriers and boosting innovation

A major competitive advantage of the proposed regulatory framework lies in its ability to reduce administrative burdens and market entry barriers. Increased trade opportunities and regulatory stability will further incentivize investment, boost innovation, and secure Europe’s standing as a leading player in the global space economy. New markets such as in-space operations and services and satellite tracking will open.

6.3.8.Focus on the impact on SMEs

As described in the previous sections, the impact of options 2, 2+ and 2++ would be twofold. On one hand, they would boost the competitiveness of SMEs by reducing the level of administrative burden for companies, who would no longer have to comply with fragmented and uncoordinated requirements across the EU. On the other, these options would also further expand space activities due to their higher level of reliability through increased resilience and safety, creating a more predictable environment that would attract more private investment and allow SMEs to scale up.

Because SMEs often lack the financial and human resources to easily adapt to new operational and technical requirements, introducing new requirements are likely to increase costs for all industry, including SMEs, potentially resulting in an increase in manufacturing costs ranging from 3% to 10%. For smaller actors it would be proportionally more expensive to comply with such measures.

This cost impact could be mitigated by: (i) support measures; and (ii) proportionality embedded in the rules, which would consider different criteria, such as the size of the companies, the criticality of the space missions or the orbits used, as described below in Table 21. A detailed description of the envisaged support measures and the proportionality regime can be found in Section 6.1.3.

Despite initial cost impacts, the initiative aims to instigate positive outcomes for SMEs. The measures included in policy option 2+ would provide a common, stable and predictable framework for conducting space activities in the EU, attracting private investment and fostering the growth of space start-ups and SMEs. This option will also ensure fairness in the market by ensuring equal treatment for both EU and non-EU space operators providing services within the EU. The redistribution of compliance costs across the market is expected to encourage equitable competition. Furthermore, the initiative seeks to strengthen the coherence of the single market. By facilitating the creation of new markets, such as in-space operations and services, the initiative will also foster business growth and employment creation. Furthermore, there is the prospect of increased business opportunities, particularly in services utilising space data.

The impact of the initiative would differ depending on the type of activity carried out by relevant SMEs.

·For launch service providers, compliance with new safety, resilience, and sustainability requirements may lead to higher costs for manufacturing, testing, and infrastructure upgrades. However, the harmonisation of technical requirements across the EU would reduce administrative complexity and market fragmentation, ultimately lowering barriers to entry and fostering competitiveness. It would also help to attract investment, which is particularly relevant considering the capital intensive needs of this segment. Additionally, the growing demand for reliable and sustainable launch services could open new market opportunities.

·For satellite operators, the impact largely stems from enhanced cybersecurity, sustainability, and space traffic management requirements, which may increase operational costs and obligations for deorbiting or collision avoidance measures. However, greater regulatory certainty and market stability would encourage long-term investments and support business scalability, particularly for small and medium-sized satellite operators. Furthermore, extending satellite lifespans and improving orbital sustainability could enhance revenue generation over time.

The majority of SMEs consulted throughout the consultation process agree with this assessment, and have stated that policy option 2+ could: a) provide a common, stable and predictable framework to foster the long-term sustainability of the activities of new commercial space actors, and attract private investment; b) create a level playing field for all European companies; and c) decrease the risk of ‘cherry picking’ between Member States with the lowest level of safety, resilience or sustainability requirements.

Table 21: Impact on SMEs

6.3.9.Summary of economic impacts

Table 22: Overview of main economic impacts

6.1.Social impacts 122

6.1.1.Baseline

Under the baseline, the continued fragmentation of the single market would negatively affect the industry and its ability to easily navigate through the various technical requirements from the Member States. Failure to adequately address common threats could have wide-ranging social consequences, potentially leading to a loss of access to critical space-based services on Earth that support essential sectors such as transport, logistics, cross-border trade, financial transactions, and aviation. Satellite navigation is essential to the operations of critical networked infrastructures in the transport, telecommunications, energy and finance sectors. Earth Observation technology can forecast severe weather events, such as drought, storms or hurricanes, making its uninterrupted operation critical for protecting potential victims. s. If the Kessler effect were to occur, access to all downstream services would be disrupted. In the meantime, access may be intermediately affected by cyberattacks and the increasing need to respond to a growing number of collision avoidance alerts 123 . Furthermore, disrupted access to satellite communication would exacerbate the digital divide problem.

An increased number of satellites without any protective measures can also cause light and radio pollution. This could affect indigenous communities’ ability to use the dark skies for their traditions, and astronomers’ access to dark skies to conduct research.

6.1.2.Policy option 1

Option 1 would entail developing an industry-driven forum to discuss the non-binding measures and the relevant appropriate instruments (for instance, best practices, guidelines, charters), but would not entail enforcement of such measures.

Compared to the baseline, option 1 would have higher social impact in terms of inclusiveness (small operators, sector associations, etc.) as it would ensure a high level of representativeness for the industry in the forum. On the other hand, the option would only partially better protect the availability and integrity of space-based services.

Certain measures may help protect the dark and quiet skies, which has an impact on especially indigenous population.

For resilience aspects, the voluntary measures are likely to increase awareness over cyber threats posed to space infrastructure, therefore increasing to a certain extent the robustness of the industry’s capabilities, taking into account the various mitigation and protection measures voluntarily complied with. This would have a certain impact on the space sector’s overall resilience as vulnerabilities along the value chain would be reduced and the environmental resilience improved.

6.1.3.Policy options 2, 2+ and 2++

Compared to the baseline, options 2 and 2+ would have social impacts that would be more significantly positive as they would include the possibility for space-based services to provide additional benefits for EU citisens. These options would also increase public trust in and reliance on space systems and services. Options 2 and 2+ would also have a significantly positive impact on the governance of the space sector on the public side by means of harmonising certain licencing conditions implemented in Europe. Furthermore, they would create a transparent and predictable framework. Option 2+ would have an even greater impact than option 2 by means of creating a forum for the private sector, thereby fostering ownership.

Adopting options 2, 2+ and 2 ++ could help stimulate innovation and R&D. They would also protect the ability of astronomers and indigenous communities to observe the dark and quiet skies. By driving R&D efforts, encouraging resource-efficient practices, and encouraging collaboration between academia and industry, both options can help introduce and share new production methods, new technologies and products, therefore ultimately contributing to the growth and competitiveness of the space sector.

Option 2++ would further protect space infrastructure, by having an additional number of satellites complying with safety, resilience and sustainability measures. However, according to stakeholders, this may a create some legal uncertainties for space operators due to the multiplication of bilateral agreements and variances involved (as a possible outcome of the international agreements).

Table 23: Overview of main social impacts